Starbucks 2Q sales improve as transactions decline

Same-store sales rose 3 percent, but failed to meet expectations

Starbucks Corp. same-store sales increased 3 percent in the second quarter, the company said Thursday, although declines in transactions offset an improving average check in the period.

Same-store sales improved as the quarter went on, and again into April, the company said.

The Seattle-based coffeehouse operator gained traction in the rapidly growing China market, where transactions increased by 6 percent and same-store sales rose 7 percent.

“With our U.S. business accelerating throughout the quarter and strong performance in China, we are poised to deliver strong revenue growth in the second half and into the future,” Starbucks CEO Kevin Johnson said in a statement.

Johnson recently replaced Starbucks founder Howard Schultz as CEO. Schultz is now executive chairman.

The results were lower than investors expected, and Starbucks’ stock fell 3 percent in after hours trading on Thursday.

Revenue in the quarter ended April 2 increased 6 percent, to $5.3 billion, the company said. Net earnings increased 13.5 percent, to $652.8 million, or 45 cents per share.

Starbucks said customers paid higher prices and bought more expensive items in the quarter, and average check rose 4 percent. Transactions fell 2 percent.

Factoring out “order consolidation” from the Starbucks Rewards loyalty program, average ticket grew 3 percent, while traffic was flat, the company said. 

Scott Maw, Starbucks CFO, said investments to increase speed of service and upgrade the brand are “paying off” with the improving sales. The improvements, along with upcoming food, beverage and technology innovations, should boost same-store sales throughout the year, he said. 

Starbucks continued to get more orders through digital channels. Starbucks Rewards represented 36 percent of company-operated sales in the U.S. in the quarter, and 29 percent of customers paid via mobile. 

Mobile order and pay now accounts for 8 percent of transactions. 

Contact Jonathan Maze at [email protected]

Follow him on Twitter: @jonathanmaze

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